ECONOMIC LIFE- PATTERNS AND PROSPECTS
- Both the agricultural and non-agricultural sectors during the Sultanat period (13th-15th century) were further strengthened and expanded during the 16th, 17th and 18th centuries. This was reflected in the growth of towns and townships.
- Most major towns had several bazars, one of which was the chief bazar or market. According to Fryer, at Surat, for instance, between the custom house and the mint was a crowded bazar of all those who came to buy and sell cloth. Further on were “the High Streets, with shops on each side…” Surat’s great bazar was outside one of the city gates, while at the entrance to the green was the market for horses and cattle. Most urban markets not only catered to the needs of local consumers, wholesale and retail, but were also storing centres or entrepots from which dealers from other centres could get their supplies. Thus, there was a complex network between the towns, and between the towns and townships.
- Supply of food-grains to the towns was an important feature of inter-local trade. Apart from food-stuffs, the villages also supplied raw materials, such as cotton, indigo etc. for many urban manufactures. This trade was in the hands of the village baniyas and the banjaras who transported the food-grains to the mandis or local markets at qasbas. Certain big villages or katras between a number of villages could also have mandis. At the mandis, the villagers not only sold their products but purchased salt, spices, metalwork and other commodities not available locally.The picture of village life presented to us by Hindi writers such as Surdas, suggests that the more prosperous sections in the villages bought, in addition, luxuries of various types, such as high quality cloth, jewellery etc.
- Regional specialisation in certain types of products, including luxury goods led to a good deal of intraregional trade. There was a special class of traders, the banjaras, who specialized in carrying bulk goods.
- The banjaras were tribesmen who moved with their families over long distances, sometimes with thousands of oxen carrying foodgrains, pulses, ghee, salt, etc. trading on their own, or carrying goods for the bigger merchants. Sometimes caravans moved under state protection for the supply of food grains to the army. The more expensive goods, such as textiles, silks, etc., were laden on camels and mules, or in carts. But it was cheaper to move bulk goods through the rivers on boats. Boat traffic on waterways, and coastal trade along the seashore was then more highly developed than now. Waterways and coastal trade was used more for movement of heavier goods since transport on land was more expensive.
- The trade in food stuffs and textile products were the most important components of inter-regional trade. Bengal exported sugar and rice as well as delicate muslin and silk.
- The coast of Coromandal had become a centre for textile production, and had a brisk trade with Gujarat, both along the coast and across the Deccan.
- Gujarat was the entry point of foreign goods. It exported fine textiles and silks (patolas) to north India. It received foodgrains and silk from Bengal, and also imported pepper from Malabar.
- North India imported luxury items and also exported indigo and foodgrains.
- Lahore was another centre of handicraft production. It was also the distribution centre for the luxury products of Kashmir – shawls, carpets, etc.
- The products of the Punjab and Sindh moved down the river Indus. It had close trade links with Kabul and Qandhar, on the one hand, and with Delhi and Agra on the other.
- There was a well organized trade network in luxury goods, with Agra and Burhanpur being the two nodal points in north India.
- Later, in the 18th century, with the decline of Agra, Banaras emerged as one of the nodal points.
- Lahore had the advantage of sending its goods down the river Indus, just as Delhi and Agra were connected by the Jamuna.
- The movement of these goods was made possible by a complex network, linking wholesalers with merchants down to the regional and local levels through agents (gumashtas) and commission agents (dalals). The Dutch and English traders who came to Gujarat during the 17th century found the Indian traders to be active and alert. There was keen competition for inside information, and whenever there was demand for goods in one part of the country, it was rapidly made available.
- Inland trade was served by a network of roads which successive rulers from the time of Sher Shah tried to improve. The transport arrangements compared favourably to those prevailing in Europe, with sarais being set up at intervals of eight or ten miles on the principal routes. According to Tavernier, the facilities were “not less convenient than all the arrangements for marching in comfort either in France or in Italy”.
- Pack-oxen and ox-drawn carts, as well as camels, were the chief means of transport, while horses were used as mounts. A palanquin, carried by four to six servants, with others to relieve would, according to Ovington, with ease carry one twenty or thirty miles a day.
- Movement of goods was also facilitated by the growth of a financial system which permitted easy transmission of money from one part of the country to another. This was done through the use of hundis. The hundi was a letter of credit payable after a period of time at a discount. The hundis often included insurance (bima) which was charged at different rates on the basis of the value of the goods, destination, means of transport (land, river or sea), etc. The sarrafs (shroffs) who specialized in changing money, also specialised in dealing with hundis. In the process, they also acted as private banks: they kept money in deposit from the nobles, and also lent it to traders. By means of hundis, they created credit which supplemented the money in circulation and financed commerce, particularly long -distance and international trade. Since the merchant could cash his hundi at the point of his destination, after he had sold his goods, movement of species or money which was always a risky enterprise could be reduced, especially when the rich traders such as Virji Vohra set up agency houses in different parts of India including Burhanpur, Golconda, Agra and in the Malabar and also in West Asia the port-towns of the Persian Gulf, Red Sea and South East Asia.
- So brisk was use of hundis that in the Ahmadabad market merchants made their payments or adjusted their obligations almost entirely through hundis. Even nobles used the hundis for payment of salaries to the soldiers.
Foreign Trade – Overseas:
- The Asian traders, conscious of the Portuguese domination of the seas, had to obtain from the Portuguese cartaz or passes for their ships on condition of payment of customs duties at a Portuguese controlled port. These passes were given liberally. In consequence, as the French historian Fernand Braudel points out, the Portuguese became customs officials, and customs revenue became a major source of the Portuguese enterprise. Thus, the Portuguese hardly changed the established pattern of trade.
- Between the middle of the 16th and the middle of the 18th century, India’s overseas trade steadily expanded, both in terms of the tonnage of the goods carried as also expansion into new areas, or areas which had been lightly touched earlier. This was due to some extent on account of the activities of the various European companies which came to India during the period, notably the Dutch and the English and later the French. Other European companies, the Austrian, the German, Danish etc., played only a limited role.
- Another important factor in the growth of trade was the rise of three powerful Asian states during the period, viz., the Ottoman, the Safavid and the Mughal. The role of the Ming in China also cannot be disregarded. These empires not only provided for law and order and conditions under which trade and commerce and manufacture could grow, but also aided the process of urbanisation and monetization of their economies. These were accompanied by conflicts and rivalries in the political field in which control over trade and trade routes played a definite role.
Role of the Foreign Trading Companies:
- The arrival of the Dutch and the English trading companies to India towards the beginning of the 17th century and of the French towards the end of the century was a recognition of the importance of India in the Asian trade network, as also a reflection of the growing appetite of European countries for Asian goods, especially spices, and their expectations of large profit.
- From the beginning, the structure of the Dutch and the English East Companies was different from the Portuguese. Neither were royal monopolies, or hamstrung by close government control. They were joint-stock companies which have
been called the precursors of the modern multinational, multiproduct business corporations in the
sense that their trade was world-wide and implied a world-wide distribution and marketing system.
Thus, they had greater freedom of action than the Portuguese. But that does not mean that they were
independent of their governments. Both had received charters from their governments which gave
them a monopoly of trade as against other merchants of their countries. Also, the companies expected
and constantly received naval and other support from their governments, partly because the owners of
the joint-stock companies were influential in their countries and their importance for the growth of their
economics. Thus, the difference between the Dutch and the English from the Portuguese was more in
form than in substance. The French company was, like the Portuguese, a royal monopoly.
There was also a great deal in common between the methods and the objectives of the various
European companies. All of them believed in monopolizing trade, and using naval force to enforce it.
They were also prepared to use naval force for extracting special privileges from native powers, to the
disadvantage of the traders of those countries. Thus, freedom of trade and equal opportunity to all
which was then the custom of Asia became acceptable to them only later when they felt they were, in a
Both the Dutch and the English tried first to establish themselves in Java and Sumatra in order to control
the trade in the finer spices, cloves, nutmeg and mace, and also pepper. From the last decades of the
sixteenth century, both the Dutch and the English merchants started sending exploratory voyages to the
Indies. The naval superiority of the Dutch fleets over the slower and bulky Portuguese carracks soon
enabled them to establish trading outposts in Java. Thus, in 1605 the Dutch captured the Portuguese
fort of Amboina. However, it took them another half a century to completely dislodge the Portuguese.
They quickly realized that a profitable trade with the Indies could not be carried out without India.
Hendrik Brouver, later the Governor-General of the Dutch settlements in the East Indies, declared in
1612 that the eastern coast of India, the Coromandal, was the left arm of the Moluccas, i.e. the spice
islands. This was because the type of textiles produced in the Coromondal were the most acceptable in
the Indies. The spice islands were not highly monetized, and the textiles were exchanged for spices. The
Dutch, therefore, first tried to set themselves up at the Coromondal. In 1606, they obtained a farman
from the ruler of Golconda to set up a factory at Masulipatam, and to trade at concessional rates. Late r,
they obtained similar concessions from the ruler of Vijayanagar, and some of the nayaks, and set up
their main base at Pulicat between the Krishna and Godavari rivers. This was the area from which much
of the cotton cloth which was preferred in the Indies was produced.
The Dutch attempt to extend their trade to Gujarat met with stout opposition from the Portuguese, and
was, at first, not welcomed by the Indian traders who had arrived at a working settlement with the
Portuguese. But when the Portuguese tried to blockade Surat, both the Mughal rulers and the Indian
traders welcomed the Dutch in order to break the Portuguese monopoly. The English, who had just won
a naval victory against the Portuguese off the coast of Surat, were also welcomed for the same reason.
The Dutch opened their factory at Surat in 1617. The English had set up a factory at Surat in 1613, but it
was Sir Thomas Roe, appointed Ambassador at the court of Jahangir in 1615, who obtained a farman
from Jahangir in 1618 confirming the English position at Surat.
We need hardly concern ourselves with the rivalries and naval conflicts of the various European powers
represented by their
trading companies. The Dutch were determined to replace the Portuguese in the Asian trade and
establish a monopoly in fine spices. For this it was necessary for them to capture Malacca which they
finally succeeded in doing in 1641. They completed their control of the pepper trade by capturing
Colombo (1655-56) and Cochin in Malabar after a long siege (1659-63). To bring to an end the
Portuguese control over the West Asian trade i.e. the Persian Gulf and the Red Sea, the Dutch blockaded
Goa for ten years from 1663 in the trading season. While ousting the Portuguese from the Spice Islands
the Dutch were not likely to be prepared to share them with the English, as the English soon discovered.
Their toehold in the Indies ended with the so called massacre at Amboina in 1623 when ten Englishmen
were tortured and executed. This warning forced the English to concentrate on India, and on the trade
with the Persian Gulf and the Red Sea. In 1622, a joint Anglo-Persian force ousted the Portuguese from
Hormuz. The trade now shifted to Gombroon or Bandar Abbas. These developments were of direct
benefit to the Indian traders who were no longer forced to- buy Portuguese cartazes for trade in the
area. The Portuguese remained at Goa, Daman and Diu but their overseas trade declined continuously,
and was insignificant by the end of the century.
Deprived by the Dutch of a share in the spice trade, the English tried to develop the export of indigo and
Indian textiles into Europe. It was found that indigo was a superior and cheaper means of dyeing than
woad which had been used in Europe earlier for colouring woollens. The best indigo was found in
Bayana, Gujarat and the Coromondal. Indigo remained an important item of export but from the 18th
century it had to face stiff competition from cheaper export from the West Indies and Spanish America.
It had ups and downs in trading till the 19th century.
The principal item of India’s trade to Europe which the English promoted was textiles. To begin with, the
most favoured items were the white fabrics and painted calicoes of Gujarat. The white fabrics were used
in North Africa and the Levant, and also for slave trade in West Africa. According to Kirti Chaudhury,
“The success of Indian cotton fabrics in Europe during these early years was undoubtedly due to their
relative cheapness as compared to non-woollen cloth produced at home…. By the third
quarter of the century the popularity of Indian textiles had become sufficiently established as to extend
their use to the luxury end of the market.” The number of pieces exported by the English and the Dutch
went up dramatically during the second half of the 17th century. Thus, the pieces exported by the East
India Company went up from 750,000 in 1664 to 1.5 million pieces in two decades, and formed 83
percent of the company’s foreign trade. The sale of the Indian textiles by the Dutch East India company
(VOC) in 1684-9 came to 1.12 million pieces. During the period the character of the trade also
underwent a change. At first, Gujarat exported only calicoes of a cheap variety which must have
appealed to people in the lower income bracket in Europe. As the fashion grew, Bengal muslins and the
Coromondal chintz were in wide demand for aristocratic wear. By 1640, the export of textiles from
Coromondal was equal to that from Gujarat, and by 1660 it was three times. The Dutch also exported
indigo and textiles from the Coromondal. In course of time, Bengal and Orissa exceeded the exports
from the Coromondal. The growth of Indian textiles into Europe threatened the French, German and
Scottish linen production, and also effected woollens.
Attempts in the 17th and 18th centuries to put a high duty on import of Indian textiles into Britain and
even to ban import of painted cloth had little effect. By 1720, in place of painted cloth the imports of
white Indian calicoes rose to 2 million pieces. However, this was probably a saturation point, and the
demand did not grow further. Meanwhile, it is significant that the early efforts to revolutionise spinning
and weaving by new machines which was the beginning of the Industrial Revolution in Britain was
motivated by the desire to undercut the imported Indian textiles.
Another item of export which the English developed was the export of raw silk from the Kasimbazar
area. This was meant to be a competition to the silk industry in Persia, as also that in Italy and France.
The export of raw silk rose rapidly after 1650 and in the eighteenth century it was the most profitable
item of export next to textiles.
Another item of export which was developed by the European companies during this period was
saltpetre which was extensively used by the munitions industry, especially the artillery in
Europe. It was also used as a ballast for the ships going to Europe. The best quality saltpetre was found
in Bihar, but was also produced in modern East U.P. and Gujarat.
Thus, by the end of the 17th century, the European trading companies had penetrated the Indian
markets over the length and breadth of the country. The English also explored Lahri Bandar at the
mouth of the river Indus through which they could draw upon the produce of Multan and Lahore by
transporting goods down the river.
The English and Dutch could penetrate the markets of India so quickly not only because of their
organisational skill, and the goodwill of the rulers of the country, but because of the developed state of
the Indian economy. Due to the well organized financial and credit system in the country, and the
transportation system, the European traders were able to move money and goods across the country
with ease, and also borrow money when necessary. Their major problem was that the export of goods
to Europe from India had to be paid for largely in gold and silver because there was hardly any d emand
in India for goods produced in Europe, except some metals and the finer spices from the Indies which
were paid for by textiles. The Europeans were able to succeed because of the availability of gold and
silver brought from America mainly by the Spaniards. In the words of Fernand Braudel, this gave Europe
“a stranglehold” over the economies of the Far East, and “placed them in position of strength.” But it
was not so seen at the time. According to the prevalent mercantilist theory, export of gold and silver
was considered a drain on the strength of a country. There was, for the reason, a constant hue and cry
about the export of gold and silver to India by the trading companies. The problem was considered more
serious by the English because the Dutch could meet a part of the cost of their exports by the revenues
from the Dutch East Indies. In 1686, Sir Joshua Child wrote to the Madras Council:
“….without (revenue) it is impossible to make the English nation’s station sure and firm in India, upon a
sound Political Basis and without which we shall always continue in the state of mere merchants subject
to be turned out at the pleasure of the Dutch and (at) the discretion of the Natives.”
Thus, the English, like the Dutch and earlier the Portuguese,
were not prepared to abide by the rules and regulations of trade which governed the native traders and
Asians, and which allowed them full freedom of trade in the country. They tried first to convert some of
their trading posts or factories into forts where they could not only enjoy autonomy, but be in a position
to defy the rulers of the region or country, or at any rate, the local administrators. It was this attitude
which had led to the conflict between the Portuguese with Shah Jahan at Hugli in 1633, and with the
English during the reign of Aurangzeb in 1687. But that was only the first stage in the ambitions of the
English, and of the French. They wanted conquest so that the revenues of the area could be used to
finance their exports, if not wholly at least to a considerable degree. This was an ambition in which the
European companies could succeed only when the Mughal empire had disintegrated, and rivalries and
internal discords of the successor states enabled the English and the French to intervene in the politics
of the country.
Thus, the European trading companies became a means and instrument of conquest, not only in India
but elsewhere in Asia.
Role and Position of Indian Merchants in Indian Ocean Trade
The earlier belief that due to the activities of the various European trading companies, their domination
of the Indian Ocean and the “continental aloofness” or “absent mindedness” of the Indian state about
the interest of the traders and the skill and resourcefulness of the Europeans, Indian traders and Indian
shipping had been largely displaced from the seas during the seventeenth and eighteenth centuries has
now been largely discarded. Recent research shows that far from ousting the Indian traders from
overseas trade, the share of the foreign companies in various regions of India, specially Gujarat,
Coromondal or Bengal remained a fraction of the total, and that Indian trade and Indian shipping
declined, and made way to European carriers only after the establishment of colonial rule in the
country. Thus, Ashin Das Gupta in his Indian Merchants and the Decline of Surat 1700-1750, calculates
that at the end of the 17th century, Surat’s annual turnover was Rs.16 million annually, of which the
European share was only Rs. 2 million or one-eighth of the total. Such estimates are only indicative
because of the absence of statistics about Indian trade. Historians are therefore obliged to rely on
European statistics which do not generally
include the private trade of their agents which was not small, or the trade of the Indian merchants
including coastal trade which was substantial.
We have already mentioned the entrepreneurial skill and organizing capacity of the Indian traders in
different parts of the country. However, information about Indian overseas traders is scanty. Indian
overseas traders have been divided into several economic categories. The backbone of India’s sea-borne
trade was provided by ship-owners and operators whose primary activity was long-distance and coastal
trade. The ship-owners themselves fell into several categories. At one end were magnates who owned a
fleet of ships which were based on one big entrepot port, such as Surat or Masulipatam, or a cluster of
ports such as in south and central Coromondal, or Bengal and Orissa. Examples of such traders were
figures such as the Abdul Ghaffur of Surat, Mir Kamaluddin of Masulipatam, and Astrappah Cherry of
Pulicat (S. Coromondal). Abdul Ghaffur was the largest merchant of the seas during the latter part of the
seventeenth and the early decades of the eighteenth century which was a boom period in trade. He is
said to own 20 ships with a total dead-weight of carrying capacity of well over 5000 tons. Thus, he could
easily challenge comparison with any of the European concerns at Surat. He traded from Manila to
Mocha, and exercised strict control over all his managers of ships (nakhudas). These nakhudas would
not deviate in the slightest from the trading and sailing directions they received at setting out from
Surat. There were other ship owners who had between five and ten vessels each. There were also single
owner-operated ships which did regular overseas trips. Joint ownership of ships was not common and
ship owning was a specialized activity. While many of the owners of ships were Muslims, Hindus did not
by any means stay away from this field. The larger fleet owning houses were controlled by the head of
the family who resided at a major port. Apart from members of his family assisting him or sailing his
ships, he would have paid servants, and regular agents in major producing centres and towns to supply
his ships with export goods. These merchants would also have servants or agents at major overseas
ports where their ships called to process the trade and to provide information about the market. Thus,
Indian shippers had agents in such places as Bandar Abbas, Basra, Malacca, Acheh, Bantam etc. The
of single ships often travelled on the ships with their cargoes. They were attended by servants and
expected and received special attention on the ships and at ports. The nakhudas or manager-cumcaptains were a privileged lot, often being substantial merchants themselves. They also enjoyed special
privileges on board the ship, and in the ports.
A second category of overseas merchants who were considerably larger than the first were those who
did not own ships, but hired space on ships of others for their own trade and the trade of others. The
bulk of India’s overseas merchants during the period belonged to this category. It was the pressure of
demand from them for shipping space which led to the construction of new ships including construction
of large carrying capacity ships of upto 1000 tonnes, during this period. We are told that the number of
ocean-going ships in Surat in 1650 was 50. The Mughal Emperor ordered in 1650 that six to eight well
built ships be built every year. This continued till Aurangzeb discontinued it. However, at the turn of the
seventeenth century Surat alone had 112 sea-going vessels.
A third category of overseas merchants were kings, princes, other members of the royal family,
administrators and military officials and nobles who took to trade. Besides the Mughals, there were
officials from the states of Bijapur and Golconda, and from the smaller Hindu states of the south – Ikkeri,
Tanjavur, Madurai etc. The rulers of Malabar states – Calicut, Cochin, Cannanore, Travancore had a
tradition of engaging themselves in trade. But most of them used established merchants for pursing
their trade. It is known that they invested heavily in ship-building, and used their ships for freight. Rulers
of some of the neighbouring states – Ayuthya, Arakan, Acheh, Johore, Bantam, etc. also regularly traded
with Indian ports in their ships, the rulers of the two sides helping each other in procuring cargo for the
ships on return.
In addition to these sections, there was a vast group of merchants who operated in the ports and their
hinterlands. Many of them were wholesalers who operated on a large scale in the import and export of
commodities. They purchased in bulk from ships, sometimes contracting for an entire ship load. They
had their own ware houses for storing goods to be sold in small lots when the price was right. These
merchants had agents in hinterland markets to dispose of their purchases. They were bulk
buyers of commodities brought by European traders, such as spices, copper, tin, broad cloth etc. Thus,
Virji Vohra of Surat was a large scale importer of pepper from Malabar and Kanara. Similarly, Ahmad
Chellaby of Surat, Malay Chetti, Kasi Viranna and Sunca Rama of southern Coromondal were masters of
extensive commercial empires. These merchants were comparable to European’s merchant princes in
wealth and power. The other categories we have discussed are brokers and middle men, and financers,
The Dutch historian, Van Leur, called the Indian merchants engaged in over-seas trade as pedlars, i.e.
merchants who carried with them goods from market to market for sale. As we have seen, this could
apply to the large number of small merchants, sometimes 500 in a ship, who carried their cargoes with
them. It has been argued that the term pedlar applied to all Indian merchants because of their isolation,
and their “basic dependence on forces (they) could do nothing to control.” (Ashin Das) The European
trade companies, with their warehouses and network of agents is said to have established
“transparency” in the market, or a better control over movement of prices. But establishing warehouses
was the basis of all large scale foreign trade which may Asian traders possessed, as also or agents for
providing information about the market. But the market remained volatile, and even the European
companies were not able to fix prices except by compulsion on the producers later on.
We have seen in an earlier volume that the commodity structure of the Asian trade hardly changed as a
result of the coming of the Portuguese. As the contemporary, Tom Pires, has pointed out, “the arms of
Cambay stretches two arms – one towards Aden and one towards Malacca”. This pointed to the
centrality of India in the Indian Ocean trade, and the role of Gujarat in the trade both with the East
Indies and Western Asia. The Portuguese attempt to engross the spice trade, and drive the Indians,
Arabs, Javanese and others from the Asian trade failed, and Gujarati merchants remained active in
South-East Asian and West Asian trade. Malabar traded with Goa, Cambay and Red Sea ports, which
were under Arab control following the failure of the Portuguese to capture Aden at the mouth of the
Red Sea. Coromondal traded with the Spice Islands in the East Indies, and with Malacca, Siam etc. But
the overseas trade of Bengal was hampered by the Magh and Portuguese pirates.
As Steensgaard has noted, if we consider the trading network of the Indian Ocean around 1600, the
continuity is remarkable. “Gujarat retained its central position…. (it) still stretched out its arms towards
the Red Sea and South East Asia.” It has been argued by historians that with the Dutch control of the
East Indies, and their determination to control the finer spices, Gujarati trade with South East Asia came
to an end. However, recent research shows this to be erroneous. With the establishment of the Dutch
factory at Surat, the new Imperial port of Gujarat, and the growth of their textile and indigo trade, it was
soon realized by them that the attempt to exclude Gujarat traders from south-east Asia by forcing them
to take cartaz by paying ten to twenty per cent duty on their goods, or to exclude them altogether, will
cost the Dutch their Surat trade which was more profitable than the realizations from South-East Asia.
Hence, from the middle of the seventeenth century, the Gujarat arm towards South East Asia was again
stretched out, but it remained a weak arm. With the Dutch conquest of Colombo and Cochin, the
Malabar trade to the Red Sea and to Goa also suffered. Coromondal ports of Nagapatam, Pulicat etc.
expanded their trade towards Acheh (North Sumatra), Arakan, Bantam, Bengal, Pegu and Malacca
(Burma), Manila (Philippines), and the Malay Peninsula. With the removal by Shaista Khan of the Magh
and Portuguese piracy at Chittagong and the coastal areas, Bengal trade towards Arakan, Burma, Siam,
etc., and towards the Persian and Red Sea ports also grew.
The main development of the period however, was the growth of India’s trade towards the West Asian
ports. Although following the accommodation with the Portuguese, permits for West Asian trade were
given freely to Indian traders, Portuguese domination of Hormuz had kept them away from Basra. To
weaken the Portuguese, the English and the Dutch freely loaded Indian goods to West Asian ports. The
trade with the Gulf became even more open with the capture of Hormuz by an Anglo-Persian expedition
in 1622. Trade from Hormuz now moved to Gombroon, which was re -named Bandar Abbas.
Indian traders were well established at Aden from where they traded with the Red Sea, and the East
African ports of Masswa, Mogadian etc. During the period, trade moved from Aden to Mocha (or
Mokha) on the Yemen coast. The safety of roads brought about by the Safavids in Iran, and by the
in Arabia, Egypt and Iraq were factors in the growth of Indian trade, mostly textiles, in the region.
Traders from Masulipatam the chief port of the kingdom of Golconda, which had good relations with the
Safavids, also started trading with West Asian ports, in addition to their trade with the islands and
mainland of South East Asia.
Two developments seemed to have furthered the trade with West Asian ports. Surat emerged as the
principal port of Gujarat which had a rich hinterland extending upto the Gangetic plain. It could also
draw textiles from Sindh and Punjab which were much in demand in West Asia. These textiles came
down the river Indus to Lahiri Bandar. The growth of haj traffic gave an opportunity to Indian traders to
trade in the Hejaz upto Mecca. A second development was the export of coffee from Yemen. The
Turkish and Arab merchants who came to Mocha for coffee, exported it to Europe and distributed it in
the far flung Ottoman empire. Although the Indians did not buy much coffee, they came to Mocha for
selling their textiles. The growth of Indian shipping at Surat was primarily to cope with this growing
exports to West Asia.
There were several reasons why the Indian traders successfully coped with the competition offered to
them by Dutch and English traders in South East Asia and West Asia. The Indian traders expected a profit
of only 10 to 15 per cent whereas the Dutch and the English were not willing to work on a profit of less
than 40 per cent and hoped for more. Freight charges on the Indian ships was also lower, sometimes
half of what was charged by the Dutch and the English. The reason for this was partly because of the
high over-heads by way of factories, maintenance of war ships and forts etc. by the Dutch and the
English. The Indian spent much less on equipping their ships, and on their establishment. The Indian also
knew better the ins and outs of the markets where he bought and sold his goods, and also the local
preferences, customs, arrangements, etc.
Ashin Das Gupta says that the Indian merchants could not charge more because of the fierce
competition from the large number of small merchants. “The small men, because they were small,
investing little and profiting less, could never be driven out of business, and the power of the great was
circumscribed by the ubiquity of the small” (Cambridge Economic History of India).
Such arguments could, however, be put forward for all trade before the growth of the system of
During the seventeenth century which has been described as the “golden period of Indian maritime
trade as well as trade in textiles,” Indian merchants were found to be settled all over South East Asia,
West Asia and the east coast of Africa. Thus, Gujarat merchants, principally it would seem banias from
Kathiawar, were settled in all the Yemeni towns and had a controlling influence over trade in the area.
At Mocha, the bania had devised the Yemeni dollar, and devised a system of deferred payment after
Nauroz. They were also settled at Jedda (near Mecca) and other Islamic towns like Zahid and Tais. A
small group of Gujarati merchants controlled the trade at Massowa, the principal port on the African
coast. This Indian diaspora in the Islamic heartland showed that trade was not circumscribed by religious
prejudices. Gujarati banias had also settled in all maritime towns of Persia and also in the interior towns
in the interior. Armenian traders were also active in the trade between Persia and India. The position of
kalinga (or kling) (Orissan and South Indian Hindu merchants) had a strong position in South East Asian
ports. A kaling was the shahbandar of the port of Bantam and another in charge of Sultan’s shipping
fleet. They were also active at Maccasar, and in Malaya and the Gulf of Siam. But their position in the
Islands weakened with the growth of Dutch power, and their successful attempts at monopolization of
trade. Hence, many of them moved northwards to Burma, to the port and capital of Ayuthya in Siam,
and Kedah, Johore etc. in Malaya.
There was hardly any change in the pattern of intra-Asian trade during the period. The major item of
export for India were undoubtedly textiles. The textiles catered both to the needs of the aristocracy, and
to the mass of the people for whom the coarse variety of textiles were produced and exported from
Gujarat. India also exported foods, such as rice and pulses, wheat, oil and ghee. There was much
demand for these items in South East Asia islands, and also at Hormuz and Aden for West Asia. Bengal
exported sugar and raw silk, Gujarat exported raw cotton, and Malabar sent its pepper to the Indian
Ocean markets. There was also coastal trade in India for these items. The Coromondal ports and Gujarat
exported indigo and the Coromondal exported tobacco.
It is thus clear that India’s export trade was not in luxuries alone. For its imports, India’s principle item of
import was horses which came both by sea and over-land. It has been estimated that 21,000 horses
were imported into India annually. There was a considerable demand for spices in India which were
exchanged for textiles at Malacca or Acheh, or at Bantam. There were other minor items like tin from
Malaya, ivory from East Africa and dyewoods from Persia. There were many other items such as wines,
fruits, almonds, rose water, medicines etc., at various ports but these were minor items. For some time,
the Dutch brought copper from Japan.
India had an overwhelmingly favourable balance of trade with West Asia which was paid for by bullion.
Thus Mocha was considered the treasure house of the Mughals. Silver also came from Persia. With the
rise of the Dutch, spices poreclain etc. from east and South East Asia were paid for sometimes in bullion.
According to Ashin Das Gupta, while the pattern of Asian trade did not change and trade remained
largely in the hands of Indian merchants, European intervention in the Indian Ocean area led to changes
in the deployment of Indian shipping from tune to time. Fortunes of Indian ports and their hinterlands
fluctuated sharply, and Indian maritime trade waxed and waned. The Indian traditional structure was
enriched and strengthened through European skill and enterprise. However, some historians are of the
opinion that the impact of the European intervention was for deeper than this. They think that the influx
of South American silver into India via the Cape of Good Hope and the Philippines had a dissolving effect
on the traditional Indian and Asian economies. This, and the rapid expansion of India’s trade during the
second half of the seventeenth and the first half of the eighteenth century also formed the first steps
towards the incorporation of India into the capitalist world market
India’s Over-land Trade
Side by side with India’s overseas trade, India’s over-land trade also grew during the seventeenth
century. The mainlines of trade between the great Asian civilizations had been set out in antiquity, and
continued to operate during the seventeenth -eighteenth centuries. The routes all converged on
Baghdad. Caravans coming from Iran, India, Central Asia and China met
at Baghdad. Baghdad was also linked by sea via Shiraz which reached the port of Siraf on the Persian
Gulf. The main highway forked, at Nishapur, one going via Merv and Bukhara to China, and the other via
Herat and Qandahar to Multan. Recently, only one of these, the road going to China has been in focus. It
has been miscalled the Silk Road, although silk was no longer the main article of conveyance over it, silk
being grown in Iran and India. Horses, jade, some silk and some porcelain were the main articles of trade
over this road. The southern route, the route going to India, was one which Kirti Chaudhury says could
well have been called the cotton road, because it was along this road that Indian textiles reached West
and Central Asia, and later, even Russia. This road terminated at Aleppo in Ottoman Turkey which was
such a mart of Indian goods that it was called “Little India”. Many Indian merchants were also settled
Indian merchants had settled in this entire region from China to Constantinople. With the decline of
Buddhism, the route to Sinkiang had come under the control of Iranians, Turks and Mongols. However,
isolated pockets of Indian merchants could be found at Yarkand and Khotan till the 19th century, to look
after the trade from Punjab to Central Asia and China across Ladakh and Kashmir. Indian merchants
were to be found all over West Asia, in port towns such as Bandar Abbas, Mocha etc., as also in inland
carvan centres, such as Constantinople, Baghdad, Aleppo, etc. The largest group of Indian merchants
during the period however, seem to have lived in Persia. According to a Russian observer, Sutur, 10,000
Indian merchants lived in the Safavid dominions during the seventeenth century. We are told that the
Safavid ruler not only allowed them to profess publicly their religious beliefs, but he even allowed them
to have a priest to officiate over their ceremonies.
From Iran, the Indian merchants spread to Balkh, Bukhara and Samarqand. More than 200 Indians,
including merchants, their servitors, brokers etc. were settled in 1712 at Astrakhan at the mouth of the
river Volga in South Russia. A colony of Indian merchants was also at Baku where they worshipped the
sacred flame. Russian historian, V.I. Pavlov, says that from Astrakhan, Indian merchants played an active
role in trade along the Volga and were frequent visitors not only to Nizhni Novgrod and Jaroslavl but
also Moscow. In fact, we are told that the Indian
merchants were prepared to extend their activities from these centres into Poland. But before this could
happen, the break-up of the Safavid empire, followed by the break-up of the Mughal empire, and the
growing debasement of the currency caused a serious set back to the Indian traders abroad.
The point to note is that everywhere the Indian merchants carried forward their own net work which
was largely though not entirely based on the family. A few outsiders were sometimes inducted into the
family. Relations, cousins, nephews etc. were set up at various places. They traded with each other
sometimes helping each other financially, and also helping to distribute the Indian goods, and arrange
for imports. They kept liaison with the main family back in India, sometimes by visits back and forth.
These family units also provided information about the market, and also helped in the movement of
money since there were no banks. The Indians formed partnerships for trade. They also entered into
commenda agreement with local merchants who undertook the task of transportation and distribution
of Indian goods to different regions, the capital being provided by Indians. The profits were agreed to be
shared in the proportion of two to the Indians and one to the local merchants. In capital starved regions,
it was a useful devise for developing a local trade net-work.
The Indians prospered because they were skillful in their business, and were frugal. They also had the
advantage of dealing with Indian textiles which were cheaper and often superior in quality compared to
local products. Thus, the French traveller, Chardi n said that the Persians “also make Calico Cloth very
reasonable but they make none fine, because they have it cheaper out of the India’s than they can make
it… (and) they understand also the painting of Linnen but not so well as the Indians…”
In consequence of this advantage the Indian merchants made money, part of which they remitted to
India, and part lent on credit. The interest on credit varied from 3 to 4 per cent per month, but was
higher on smaller loans which could not have been secured from property. Hence, Indian merchants
were often accused of being usurers.
The exports from India, apart from textiles, included indigo, spices and sugar. The imports included
horses, carpets, furs, dry fruits, and species. Horses accounted for the largest item of
imports. While horses from Turan had to be paid for by export of cloth and some silver, India’s trade
with Persia, Syria and Russia had a favourable balance of trade, which was met by export of species
Thus, it is clear that the ban on Indians not settling where the munja grass did not grow or losing caste if
they crossed the salt sea hardly worked. The merchants settled abroad included Multanis – a general
term which covered Marwari baniyas and Oswals, Jains, Sindhis, Gujaratis, and Khatris from Punjab.
Afghans were also active, as horse traders and carriers of goods.
It is difficult to estimate the quantum of goods across the overland Mughal frontiers. According to an
estimate, Mughal mints from the northwest parts of the empire – Kashmir, Kabul, Lahore, Multan and
Thatta together issued the largest number of coins of all the Mughal mints amounting, taken together,
to 36.7 per cent. Apart from Thatta which was a river port, the mints of Kabul, Lahore and Multan would
have issued coins out of the silver imported from Iran and Turan.
The Mughal State and Commerce
Discussion about the attitude of the states, especially the Mughals, and the bigger states of the times,
Bijapur and Golconda, towards commerce brings us to the question of the nature of the state. The
coastal states of Malabar and the Hindu Nayakdoms of South India as also the Marathas fall into a
different category. They were more conscious of the importance of trade for their economies and
interacted closely with traders, or even tried to monopolize the major items of export such as pepper.
However, they formed a special category and did not influence the course of events in the rest of the
country. The Marathas, specially Shivaji, were more conscious of the importance of the navy than any
other Indian power. But continuous embroilment of the successors of Shivaji with the Mughals put a
stop the their efforts to build a navy.
It is wrong to consider that since the Mughals came from Central Asia they were indifferent to tr ade.
Recent research shows that since Central Asian states were located in steppe lands with limited land for
agriculture, they were even more conscious of the importance of the roads – east to west, and south to
north which criss-crossed their lands, and upon which cargoes moved. The control of such roads in order
to tax the customs
was, thus, an important part of Timur’s empire building. The Mughal attempt to conquer Gujarat, Bengal
and Sindh — three commercial regions of the country, and their attempts to keep their control over
Kabul and Qandahar, two of the principal over-land trade marts is comparable to Timur’s attempt to
control the important Central Asian trade routes.
In the rich fertile plains of north India, the state’s share of the agricultural surplus was far greater than
the tax on trade. However, as commerce expanded, the rulers as well as the nobles began to look upon
trade as a supplementary source of income. This type of an approach had both negative and positive
aspects. Negatively, both the rulers and nobles holding administrative charges tried to distort trade for
their personal profit. Thus, in 1633, Shah Jahan gave to a Gujarati bania, Mohandas Danda, the sole
rights to buy indigo grown in the kingdom. He was to return rupees eleven lakhs in three years time out
of his profit, including rupees five lakhs which were advanced to him from the royal treasury. The object
was to raise the price of indigo for the Dutch and the English. The scheme failed after a year because of
the refusal of the Dutch and the English to buy excpt at their own prices.
Another commodity which was frequently sought to be monopolized was saltpetre. When Mir Jumla
was the Governor of Bengal, he tried to become the sole supplier of saltpetre to the English. Shaista
Khan who succeeded Mir Jumla, tried to monopolize salt, bee’s wax, and the purchase of gold.
Although the foreign traders protested indignantly at such monopolies, such monopolies were not at all
unusual, the Dutch and the English East India Companies, themselves enjoying the monopoly right of
trade in the East. After the Dutch monopolization of the trade in spices and their conquest of the pepper
producing areas of Shri Lanka and Malabar, the price of pepper rose three times.
More objectionable was the attempt of some officials to monopolize trade in their areas in order to sell
them more profitably to other traders. Thus, Prince Azim-ush Shan declared the entire import trade of
Bengal as his monopoly – calling it sauda-i-am-o-khas. Wazir Khan, the Governor of Lahore, made great
profit because he got a commission on everything which was bought or sold at Lahore. However, such
practices were frowned upon. Aurangzeb wrote a sharp reproof to Azim-ush-Shan when he heard about his attempts at
More common was the practice of rulers, members of the royal family, and even some leading nobles
having their own ships which made regular voyages to the Red Sea ports and to Southeast Asia. Thus,
Jahangir, Nur Jahan, Prince Khurram had ships which plied between Surat and the Red Sea ports. When
Khurram was Governor of Gujarat, his ships carried on an extensive trade with Mocha. Shah Jahan was a
major participator in shipping which extended to queens, princes and princesses of the realm. From
1640, for over a twenty year period, there was a brisk activity of ship building in the Gujarat dock yards.
They were generally big ships upto 1000 tonnes ordered by members of the royal family. Prince Dara
and Aurangzeb had their own ships which traded with Acheh and Bantam. Jahanara also traded in her
own ships, and on the ships of the Dutch and the English. This extended to the Deccan kingdoms. Thus,
as a leading noble at Golconda, Mir Jumla had a large fleet of ships which traded with Bandar Abbas,
Red Sea ports and Southeast Asia. We are told that shipping in Bengal was generally owned by leading
These activities cannot be considered harmful to trade. They created additional carrying capacity which
also helped the Indian traders. On occasions, however, restrictions were placed on the loading of Dutch
and English ships at Surat till the royal ships were fully laden.
Competition for freight traffic had arisen because the English had entered into it in a big way, and the
Dutch joined in reluctantly when they were not doing so well in West Asian markets. Royal pressure was
one way to off-set the advantage the English and the Dutch had in providing better security against
piracy and the better reputation for seamanships they had in the Indian Ocean. Indian traders generally
split their risks by trading both on Indian ships, and the ships of the Europeans.
Of more direct benefit to the traders was the investment of members of the royal family in lending
money to the merchants for trade, or even advancing money from time to time from the royal mint. In
1646, the English factors complained of shortage of money at Surat, for as soon as money was coined,
the merchants at Surat paid it to the king’s diwan in satisfaction of the advances made by him.
In this way, a part of the agricultural surplus extracted by the ruling class was converted into commercial
capital. Of greater significance was the fact that as a result of their direct involvement with trade, the
king and his leading nobles became more aware of the concrete problems facing the merchants.
According to the prevalent philosophy which can be called the Islamic or Asian philosophy, all
communities were free to regulate their internal affairs according to their own laws and customs. This
applied equally to the traders. The traders in every major city were generally organized on a religiouscum-caste basis. Thus, at Surat, the Jains had their own organization headed by a major seth. Likewise,
the baniyas and the Muslims. These organisations constantly interacted with the local port
administration, and also had access to political power at the intermediate / provincial level, and the
highest central level. They peddled influence and played politics with the various organs of government.
Merchants had access to the highest provincial officials to defuse an impending crisis, or to sort out a
problem before it got out of hand. Merchants also employed vakils or agents in the courts of emperors
and powerful princes through whom representations were made to redress grievances or make
complaints. Thus in 1616-19, the Indian merchants first persuaded the Emperor not to allow English
ships to Mocha, but when the English blockaded Surat the merchants were the first to make
representations to the emperor to solve the dispute. In the 1680s and 1690s, when the English were
pressurized to protect Surat shipping in the Arabian Sea from English pirates, an order of the Surat
shippers to obey the orders of the Dutch convoy vessels was signed by the three bania brothers,
Kishandas, Bhagwan Das and Trikam Das, and countersigned by the mutasaddi of Surat.
In general, neither the Mughals, nor the rulers of Bijapur and Golconda believed in administrative trade,
though silk was a royal monopoly in Persia under Shah Abbas, and the rulers of Acheh, Ayuthya, Arakan,
Pegu etc., often made tin, rice etc. royal monopolies. In Travancore also the entire pepper trade was a
royal monopoly. The major etfort of the Mughal state was that trade was kept free and the sea routes
open to their merchants. The Mughals lacked a navy and both their ports and shipping on the high seas
were vulnerable to the threats or pressure, first of the Portuguese, and them of the Dutch and the
the Mughals used their power to decide whom to allow to trade in their territories, and to set up their
trading establishments. To ensure freedom of trade to the Indians, they also did not allow the foreigners
to set up forts or armed settlements in their territories. This was a delicate balance which the Mughals
maintained in their territories till the empire itself disintegrated. In the first three decades of the
century, the Mughals had to do some tightrope walking to deal with a difficult situation facing trade at
Surat. They had to deal with three aggressive European trading powers, the Portuguese, the Dutch and
the English, each of which desired domination of the seas. Skillfully utilising their differences, they
ensured that Surat was more free as a trade centre than ever before. The ousting of the Portuguese at
Hugli by Jahangir not only opened Bengal to the Dutch and the English/but was an object lesson to all
that they would not be allowed to build fortifications within Mughal territories.
The biggest crisis that faced the Mughals in respect of freedom of navigation was in the 1640s, when the
Dutch attempted to take on the mantle of the Portuguese to control and redirect Indian Ocean trade.
The Dutch denied passes to Indian ships leaving the ports of Gujarat and Bengal to sail to Southeast Asia
ports, on the ostensible plea that they were at war with the rulers of Acheh, Perak and Kedah. Their long
term aim was to discourage Indian ships from trading eastwards so that they could engross all the
markets for themselves and be the sole suppliers of Indian goods. Despite the opposition of the Dutch
merchants in India who understood the implications of this policy for their trade in India, this policy was
sought to be operated for a number of years. The Dutch showed that they meant business by blockading
Surat, and seizing ships as prizes. The Mughals retaliated on land by seizing all the Dutch factories, and
arresting their agents. This led to hostilities which continued between 1648 and 1652. Since the trade of
Surat was being harmed, Shah Jahan had to agree to Indian ships going to Southeast Asian ports paying
duty at Batavia. But the Dutch soon realized that this would harm their lucrative trade in Bengal and
India. Imperial directives were sent out to obstruct Dutch trade. With Indian ships and their cargoes held
up, and sailing of ships from Surat disrupted, both sides were keen to come to a settlement. Shah Jahan
granted a farman to the Dutch in which he assured them that Surat ships would not sail for
Acheh. But once the Dutch blockade of Surat had been lifted, officials put pressure on the Dutch to grant
passes to the Indian ships. By 1652, the Dutch had given in and passes began to be given freely. Indian
trade with Southeast Asia resumed.
The Mughals came into clash with the English East India Company in 1687. Although their main
complaint was about customs, it should be remembered that the Mughals customs were exceedingly
low, between two and a half to five per cent. In addition, road-tolls (rahdari) though officially prohibited,
was charged by local rulers and jagirdars. Presents had often had to be made to customs officials. But
these were parts of a system which were equally applicable to Indian traders. The European traders,
unable to compete with the Indian traders on a basis of equality or because of their psychology of
establishing a special position or monopoly, always sought special concessions. Such concessions were
often given by the Mughals and local rulers to encourage European trade. Thus, in 1650, Shah Shuja, the
Governor of Bengal, gave a nishan to the English to trade in Bengal without paying customs duty on
payment of a lump sum of Rs.3,000 annually. Successive governors could not be bound by this order,
especially when English trade in Bengal had gone up by leaps and bounds since 1650. In 1680,
Aurangzeb gave a farman permitting the English to trade in all parts of the country on payment of
customs duty at Surat. The interpretation of this farman also led to disputes, the English claiming the
right of duty free imports and exports from all ports by paying customs at Surat. This led to English
attacks on Hugli and Chittagong in 1686-87, sacking of Balasore, blockading of Surat and seizing Indian
ships at sea. The English had apparently over-estimated their power, and seizure of their factories all
over the empire and arrest of their agents soon brought them to the negotiating table. As in the case of
the Portuguese earlier, the Mughals had no desire to banish the trade of one Europe power, and
become completely dependent on the other. Hence, Aurangzeb pardoned the English on a payment of a
fine of Rs.150,000, and restored the order of their trading in Bengal free of customs on a payment of an
annual sum of Rs.3,000.
A third crisis which the Mughals faced towards the end of the seventeenth century was the growth of
piracy, both by Europeans and Omanis. The most notorious pirate was Captain Avery who captured
several Surat ships, including those belonging to the
royal family. His prize catch was the Mughal ship Ganj-i-Sarwar, which reputedly had goods worth Rs.52
The Mughals sought to meet this situation by pressuring the three European companies to convoy
Indian ships. Simultaneously, the number of cannons the Indian ships carried was steadily increased
from twenty-four to forty and then to fifty, like their European counter parts, and their hulls
strengthened to bear the strain of firing. We are told that by the end of the seventeenth century, shipbuilders of Surat were building ships that looked like European ships. Thus, Indian ships were improving
in design and armaments. But because of navigational weakness, not placing the cananons properly, and
lack of experience they were unable to meet armed European ships. But developments showed that the
Indians were slowly catching up. The navy of Kanhoji Angria was fitted with long range guns with which
he could batter his opponent’s ships while remaining beyond the range of their guns. The Omani menof-war which were built at Surat had a formidable reputation in the Arabian Sea. The Muscat Arabs had
begun to fit out large warships, and in 1695, the French ship, Legier, of forty guns, ran into two Muscat
ships of sixty and eighty guns respectively, off Goa and was promptly engaged. The cannonade
continued till nightfall when the French ship mnaged to get away under cover of darkness. It arrived at
Goa in a shattered condition, its Captain killed.
Thus, technical differences between European and Asian ship building and their armaments were being
narrowed down. According to Manucci, Aurangzeb had considered building war ships and an
experimental model ship was constructed by European craftsmen on Aurangzeb’s orders. The European
artillery men in the Europeans’ service gave a highly effective demonstration of the model ships capacity
to fire in all directions. But the Emperor decided against the project. We have a curious comment on this
in Aurangzeb’s letters where, upon the European seizure of some Indian pilgrim ships, the Emperor
discussed various ways as how to deal with the continuous European threats. After discussing the
project of building a navy to counter the European threats, Aurangzeb decided that it would be cheaper
to compromise with the European trading companies rather than to try to challenge them on sea. May
be, if the Mughals had been able to consolidate their hold on the Deccan,
and its vast coast-time, they might have felt impelled to build a navy.
Trend of Indian Economy during the first half of the 18th century
We have shown that although the Mughal state was a class state in which the ruling classes exploited
the fruits of the labours of the working peoples, it was not “an insatiable Leviathan” with an unlimited
appetite for resources as Tapan Ray Chaudhuri has argued. Nor was it a mere “conquest state”, all premodern states being the result of conquest. Both the earlier Hindu and the later Islamic states had a
definite philosophy of development of agriculture and protection and encouragement of trade and
manufactures. For both, sovereignty implies protection of the people. They were conscious of the
importance of commerce and traditionally made a distinction between the ordinary shopkeepers, and
the big business houses which were involved in wholesale and foreign trade. Members of such families
were considered almost social equals with the rulers, and could be called upon for extra help in times of
need. Both the Panchtantra and the Mirrors of Princes testify to this.
It has been argued that this philosophy did not bridge the gap between the interests of the rulers and
his officials who were often found to be grasping. This may be true to some extent. However, the
Mughal centralization, including building of communication facilities, establishment of law and order, a
uniform currency of high purity, and the administrative processes which emphasised money as the main
medium of transaction, including the collection of land revenue which provided the bulk of the
resources of the state, led to a quickening of the economic processes. These processes did not come to
an end with the rapid disintegration of the Mughal empire in the first half of the 18th century. Nor did
the establishment of new states, including break away provinces or riyasats, and the warfare between
them and the rising Maratha, Jat, Afghan and Sikh states lead to a breakdown of law and order or
seriously undermine the working of the economy. The new ruling classes aped the life style of the
shrinking Mughal ruling elites, and promoted agriculture and commerce in their territories. A proof of
this is that neither the English, the Dutch or the French trading companies found any difficulty in
procuring the cotton, silk and
other commodities needed for their growing exports to Europe. There was a decline of some of the
“sun” cities, such as Delhi and Agra but this was compensated by the expansion of new cities such as
Faizabad and Banaras, Poona, Hugli etc. Thus, overall the first half of the 18th century cannot be
considered a period of growing deurbanisation or decline of trade and manufacture.
Not only was the first half of the 18th century not a period of de-urbanization, it was a period during
which the money nexus penetrated further into the countryside. To some extent, it was due to the
growth of cash crops, such as cotton, indigo, tobacco, etc, as also to cater to the growing demand for
export of textiles to Europe, and tobacco to some of the neighbouring countries. War-fare needed cash
which was provided either by taking loans from the sahukars (merchants-cum-bankers), and or by
letting land out on farm (ijara). The growth of the practice of ijara during the period was an index of
both a growing weakening of centralized control over the countryside as also the ruler’s need for ready
cash. Sometimes, sahukars were given lands on ijara to pay back the money taken from them on loan. I n
some cases, sahukars themselves competed for obtaining villages on ijara. Thus, in 1767, Mohan Ram
Inder Chand secured the ijara of two talluqas of pargana Khandela in the erstwhile Jaipur state for a sum
of Rs.60,000/-. He had estimated the jama of these villages to be Rs.1,00,000/-.
Commenting on the internal state of Central India dominated by Holkar and Sindhia during the 18th
century, an acute British observer, Malcolm, in his Memoirs of Central India, noted:
“The land of the Maratha princes are usually rented, and as many of the renters are either bankers or
men supported by that class, they have acquired and maintain an influence, both in the Council of the
state, and the local administration of the provinces that give them great power, which they use solely
direct to the object of accumulation.”
He goes on to say that the Maratha rulers often demanded one or two years’ advance payment of a
year’s revenue to some of the bigger grantees who took money on loan for the purpose from the
bankers at an interest of one per cent per month.
However, we are unclear how widespread was the practice of giving ijara to city based sahukars. It
would appear that the largest holders of ijara were people connected with the rural
areas, i.e. zamindars, jagirdars, local well-to-do peasants including mahajans, patels, etc. The taking of
long term ijara of lands which had been assigned to Mughal mansabdars by the Amber and other rulers
was a means of strengthening and expanding the territorial jurisdiction of the states. The major
involvement of the sahukars in the working of the system was their standing forth as malzamins or
guarantors of the contracts entered into. Sometimes, even zamindars sought loans from sahukars for
the payment of the land-revenue due. Thus, we are told that in Awadh, it had become a practice that
the land-revenue when it was due, was paid by the family bankers. If the zamindar or talluqedar (a new
category of people who undertook the responsibility of paying land-revenue from a talluqa or region
contracted by many zamindars) were not able to supply the banker with sufficient funds, the banker
would advance it out of his own resources, and recoup it when the rents came in, charging an interest of
one per cent per month, which could go up to three per cent.
Another institution whereby the banker-cum-merchants became closely involved with the
administrative processes, was the use of the bima-hundi method for the movement of money-cum-land
revenue or other payments over distant places. Thus, the surplus of the land-revenue from Bengal or
from khalisa lands amounting to over a crore of rupees, was sent in the middle of the century by Jagat
Seth by a hundi.
It is not clear whether the monied elements began to interest themselves in the purchase of zamindaris.
While we have evidence of many more sale of zamindaris during the period, these were generally small
zamindaris. The sale price of the zamindaris, amounting to about two and a half times the land revenue
also suggests that the income from these zamindaris was not sufficient to attract substantial bankers.
The noted exception was the acquisition of Burdhwan raj by a Punjab khatri trader.
The big zamindaris grew because of the weakening of the jagir system enabling powerful people to
carve out spheres of influence. Thus, able and competent men who could command a following or
jamiat forged ahead. At the lower level, madadd-i-maash holdings ceased to be subject to confirmation
by successive rulers, and became zamindaris. These small zamindars lived in the villages, and constituted
a petty landed gentry which lived at a slightly higher standard of living, and hence had an appetite for city goods. This was another aspect of the penetration of urban goods into the countryside.
Price rise could have been another factor in the strengthening of the position of the traders, and the
further monetization of the economy. A modern historian, Irfan Habib, has argued that prices in the
country doubled by 1670 as compared to prices at the end of the sixteenth century. After a lull, prices
rose again during the period after 1710, and doubled by the middle of the eighteenth century. Some
other historians have questioned the price rise during the seventeenth century on account of
insufficient data, specially data regarding agricultural prices. Thus, Om Prakash has argued that there
was no price rise in Bengal on account of rapid expansion of manufactories, thus counteracting the
effect of the influx of Spanish silver into India to cater to the growing European taste for oriental goods.
The price rise during the eighteenth century is supported by a continuous series of documents belonging
to Eastern Rajasthan, on the basis of which the prices of agricultural commodities including dif ferent
crops during the period have been worked out. However, bearing in mind that there was no national
market in food-crops during the period such a price rise can only be considered tentative till there is
corraborative evidence from other regions of the country. Not only traders even peasants connected
with the production of market oriented products – such as raw silk, indigo, sugar, oil, saltpetre etc. who
were often part time traders, benefited from this price rise at least in the central region.
Another aspect of the situation was that the growth of trade and manufacture for domestic and foreign
markets led to the increasing control of the merchants over production and over the producers. The
means of this was the dadni or letting out system where by advance of cash and raw materials were
made to the artisan. Although the system was not new, it seems to have grown further during the 18th
century. By this system attempts were made to tie the artisan down to certain merchants. The European
companies also followed this system, generally operating through Indian agents or gumashtas. Much of
the textile production in South India was located in villages. Although the artisan was theoretically free
to sell his products to whom he liked, attempts were made through advance of loans to bind him hand
and foot to an individual merchant. Thus, as we have noted, in the 1670s, Kasi Viranna and his partners
control on the entire coast of Madras to Armagon that the settlements of the weavers were called
“Viranna villages”. This system was gradually extended to all products such as saltpetre, indigo, even
Kashmiri shawls. However, in general the artisans continued to own the implements of production. Nor
did it lead to any changes in the system of production, although the Europeans companies in particular
tried to lay down strict conditions about the size, quality and design of the textiles. In only some cases
do we find workers working under common supervision, as we have noted. Although the financial
control of the merchants over the artisan was such that the loans or advances made to them are
sometimes referred to as wages, the dadni system by itself could not change the system of production.
The Dutch did set up their silk reeleries with winders working on a wage basis. But such efforts were few
and far between.
A more significant feature was the effort of independent artisans to set up their own producing and
marketing units. Thus, in mid eighteenth century at Lucknow there were master artisans who had upto
500 apprentices. In Bengal there were affluent weavers who employed their own capital for production,
and sold their goods freely. In Kashmir, the shawl industry, a large workshop upto 300 looms which was
the property of the master craftsman whose profit was one fifth of the net profit.
These are indicative of potentialities of development in eighteenth century India. Another aspect which
is important in this respect is the continuous growth of commercial capital in the country. We have
already discounted the idea that merchants could not accumulate profit for fear of administrative
interference. As Irfan Habib says… “merchant capital was considerable in size and an efficient system of
credit not only enlarged it, but also gave it mobility.”
It has been argued that high rate of interest prevalent in India as compared to Europe is indicative of a
shortage of capital. There was some fall of interest rates in the middle of the 17th century. Thus, in
North India, the rate fell from about 1 to 1 1/2 per cent per month to 3/4 per cent or even to 1/2. In the
Deccan it fell from 2 per cent per month to 1 1/2 percent and below. Even then these rates were higher
than in England. The reason for this is not quite clear: Perhaps, traditionally in India interest gav e a
higher rate of return. But there is enough evidence to suggest that there was no shortage of capital in
country. There were extremely wealthy traders in different parts of the country who, it is known,
financed the country trade of the European companies off and on. The expansion of productive
resources in the country to cope with increased demand for exports without a sharp increase in prices
would not have been possible in a situation of shortage of capital.
It does not of course mean that growth of commercial capital would have automatically led to the
growth of industrial capitalism. The use of machines which displaced labour and increased productivity
or machinism was hardly wide spread in India. Nor was there a strong basis of science and technology. It
should be borne in mind that the development of industrial capitalism in South England was a unique
phenomenon which could not been replicated anywhere else in the world at the time. But once such a
development had taken place, it could have been replicated elsewhere, as happened in the case of
France, Germany and Japan later. The point to note is that with plenty of merchant capital, a group of
skilled financers and entrepreneurs and skilled craftsmen, India could also have moved in this direction if
colonial intervention had not completely distorted its economy, and in place of its being the leading
manufacturer of the Asian world, reduced it to the position of a raw material producing periphery of the
It has been argued that before the rise of a capitalist world economy in the 19th century, there were a
series “world economies” in existence, and that India and the Indian Ocean region formed one such
economy. Fernand Braudel defines a world economy as “an economically autonomous section of the
planet able to provide for most of its own needs, a section to which its internal links and exchanges give
a certain organic unity”. He argues that India was one such centre having “turned the Indian Ocean into
a sort of private sea, from the east coast of Africa to the islands of the East Indies.” As we have seen, the
coming of the Europeans did not change this reality at least till the second half of the eighteenth
century. According to Braudel, each such region invariably had a centre, with a city and an already
dominant form of capitalism, whatever form that took. Steensgaarde argues that with India as its
hinterland, Surat emerged during the 17th century as such a centre, like Amsterdam in Europe, having
abundance of capital and a large number of industrious and capable bankers and entrepreneurs, free
to all ships and a large shipping fleet which could reach every corner of the region within one season.
Although the Dutch tried to make Batavia an excentric centre, they could not succeed primarily because
of the Dutch attempt at monopolization rather than free trade as practised by the Mughals, and other
Asian states. However, during the eighteenth century, the position of Surat was undermined. The
disintegration of the Safavid empire led to a reduction of Indian exports to the region and due to the
weakening of the Mughal empire, the Surat traders were not able to withstand the pressure of the
English and the Dutch, and their constant efforts at monopolization of trade. In consequence, there was
a sharp fall in Indian shipping at Surat. From 112 in 1701, arrival of Indian ships at Surat declined to 32
per year between 1716 and 1733, and to 19 between 1734 and 1741. The other Indian traders were
effected more gradually, loading their goods on European ships, and gradually becoming more
dependent on the European companies rather than being traders in their own right. The breaking of
links with the productive centres in the Gangetic Valley following the .decline of the Mughal empire and
anarchy in Gujarat following the Maratha incursions did create temporary problems but can hardly be
considered the major factor for the decline of Surat, as Ashin Das Gupta has argued. The simultaneous
decline of Asian trade, and the growing European trade which was carried by European companies in
European ships – Steensgaarde believes that during the eighteenth century India’s trade to Europe was
more than half of its overseas trade – gradually reduced the Indian traders to a secondary position, and
led to the incorporation of India in the capitalist world economy. However, the basis on which this
incorporation took place – the ruination of Indian handicrafts by economic and political pressure, and
making India a mere supplier of raw materials belongs to a separate phase of Indian history.